Success fee reduced from 100% to 30% in DWF catastrophic injury claim
Martin v Prince and RSA
High Court - Regional Costs Judge Harris
The High Court has recently had to assess the appropriate success fee in a DWF catastrophic injury case where liability was admitted but there were complex arguments on causation. Sarah Mir who was involved in the substantive issues and Gill Lines who dealt with costs, discuss the relevant issues and the judge’s decision to reduce the claimant’s success fee from 100% to 30%. Martin v Prince (2014)
Background and causation
DWF’s Dave Young, assisted by Sarah Mir, was instructed by RSA to act on behalf of their insured in relation to a motor accident that took place in 2007 (the “index accident”), when the claimant pedestrian was struck by a reversing vehicle on the insured’s commercial premises. Liability was admitted.
The claimant’s initial injuries were orthopaedic in nature including fractures. He was admitted to Arrowe Park Hospital and whilst undergoing surgery to the femur, suffered a stroke, resulting in a need for care on a 24/7 basis. Medical advice was that there was a causal link between the need for surgery and the stroke. A programme of rehabilitation was funded by RSA.
The defendant argued that due to the claimant’s pre-accident medical history, but for the accident, he may have suffered a stroke with similar consequences in any event. As this was a discrete area of cardiovascular neurology, the issue could not be dealt with by the parties’ neurological experts, Professor Barnes and Dr Schady. The defendant therefore instructed John Bamford, a neurologist specialising in stroke medicine, who was of the view that the claimant would have been vulnerable in any event to a stroke occurring at some time in the future.
This was an unusual case as in 2004, some three years before the index accident, the claimant was assaulted, suffering a serious head injury which left him with numerous cognitive problems that were persistent at the time of the index accident. A claim was being pursued under the Criminal Injuries Compensation Authority scheme for the injuries sustained as a result of the incident in 2004.
Having investigated causation, the defendant successfully argued that there was no legal obligation to meet all of the claimant’s needs following the 2004 incident. For example, he would not have returned to any form of work and would have relied on others for transport and for some supervisory care. As such, these losses would be compensated through the CICA claim.
Even though there were complex issues on causation RSA funded the purchase of a new two storey property coupled with adaptions including an indoor lift and the case eventually settled for the sum of £2.1m plus annual periodical payments of £135,000 in relation to care.
To add further complexity to this case, the claimant then presented a formal bill amounting to just over £755,000.
The appropriate success fee
The main preliminary issue in relation to the claimant’s bill was the 100% success fee claimed. Liability had been admitted before the claimant entered into the CFA so the main complicating factor as highlighted above, was causation and its impact on the quantification of damages. It should be remembered that when considering the level of success fee, each case is to be determined in accordance with the risk of non recovery of costs assessed at the point of entering the CFA. The only risk in this case of the solicitor recovering no costs at all was if the claimant had failed to beat a rejected Part 36 offer at trial.
Post Jackson it has become increasingly common for claimant solicitors to claim an alternative percentage increase of 100% in cases where damages have settled in excess of £500k pursuant to the old CPR r.45.18, even where the case has not proceeded to trial. When faced with this situation, defendants need to be aware of the guidance of the Court of Appeal in C v W  EWCA Civ 1459. In that case, liability had been admitted but contributory negligence raised. At detailed assessment the success fee awarded was 70%. At the first appeal this was reduced to 50% but the Court of Appeal reduced it to 20% on the basis that the real risk was failure to beat a rejected part 36 offer. This was a clear message by the Court of Appeal that not all cases should be taken as having a 50/50 chance of success when they get to court so as to justify a 100% success fee, especially where the claim involves a pedestrian.
Bright v Motor Insurers’ Bureau (2014)
This Court of Appeal guidance has recently been reinforced by Slade J in the High Court decision of Carol Bright v Motor Insurers’ Bureau  EWHC 1557 (QB). This was another pedestrian claim in which the claimant suffered a severed spinal cord injury leaving her tetraplegic. In 2012, costs litigation followed a settlement in which the Motor Insurers’ Bureau (MIB) agreed to pay the claimant £1.6m. Counsel for the claimant had argued that base costs, as well as success fees, were at risk if the claimant lost and that here, the MIB had refused to admit liability, unlike the situation in C v W. The High Court backed the costs judge’s decision to cut the success fee from 75% to 30%. In reaching this decision, Mrs Justice Slade, sitting with Master Campbell, found that Master Rowley’s first instance decision that the MIB would be hard pressed to contest liability was ‘amply supported by what was known at the time of entering the CFA’. Slade J agreed with Master Rowley that the main risks for the claimant were the risk of a part 36 offer and the complications that might follow a finding of contributory negligence.
Does complexity & value of the claim determine risk?
In Martin the defendant further submitted that the question of causation, as to whether the stroke was caused by the accident or other factors, did not go to risk but to the overall complexity of the matter to be taken into account in the hourly rates. In his judgment Costs Judge Harris stated:
This case can never justify a 100% success fee….the issue of causation and the severity of injury, and by consequence the level of the claim, does not go to risk but to the hourly rate…it is highly probable that the claimant was going to recover something”.
It was against this backdrop that the judge agreed with our submissions and reduced the success fee from 100% to 30%. This case provides a helpful overview and application of the caselaw in this area and it also demonstrates the increasing importance post Jackson of close collaboration between the legal advisers with conduct of the substantive issues and their costs team.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.